Health Centers to White House: Don’t Implement “Misguided” 340B Executive Order

Your 340B Report for Thursday Oct. 29, 2020

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Health centers told the Trump administration its executive order conditioning their future federal grants on making insulin products (above) and epinephrine auto-injectors available to low-income patients at the reduced 340B price they pay for the products is based on fundamental misunderstandings of how centers and 340B operate, and if implemented would do “significantly more harm than good.” | Source: Shutterstock

Health Centers to White House: Don’t Implement “Misguided” 340B Executive Order

The National Association of Community Health Centers (NACHC), state primary care associations, and local federally qualified health centers (FQHCs) have submitted comments urging the Trump administration not to implement a “misguided” executive order taking away their 340B program savings on insulin and epinephrine autoinjectors.

If the administration insists on publishing a final rule to implement the order, NACHC, the state groups, and local FQHCs said, it should rewrite the rule to avoid imposing even more financial costs and administrative burdens on centers.

Yesterday was the deadline for public comments on a U.S. Health Resources and Services Administration (HRSA) proposed rule to implement Trump’s late July order stripping health centers of all 340B drug discount program savings on insulin, plus EpiPens and comparable epinephrine devices, dispensed to low-income patients.

According to the federal Regulations.com web portal, HRSA received 222 comments on the proposed rule. Only 95 had been posted for public viewing as of mid day. Most of the available comments are from local FQHCs and state primary care associations, and they track NACHC’s arguments and requests closely.

As of early this morning, there were no comments posted from pharmaceutical industry trade groups or manufacturers of insulin or epinephrine autoinjectors.

Trump’s executive order conditions health centers future federal grants on making insulin products and epinephrine auto-injectors available to low-income, uninsured, or under-insured patients at the reduced price FQHCs pay for the products under the 340B program. It was one of four executive orders on drug pricing that Trump signed on July 24 in the White House in front of an invited audience on a stage with props to mimic a pharmacy. Trump vaguely brought up his 340B insulin executive order later during both of his debates with Democratic presidential candidate Joe Biden.

At the White House signing ceremony, Trump and U.S. Health and Human Services (HHS) Alex Azar said health centers were getting “radical” 340B discounts on insulin and EpiPens, keeping the savings for themselves, and charging their poorest patients “massive full prices.” NACHC has pushed back strongly on the accusation and the need for the executive order.

NACHC, State Association, and Local FQHC Comments

In comments filed yesterday, NACHC strongly urged the administration not to issue a final version of the rule to implement Trump’s order, saying the order is based on fundamental misunderstandings of how FQHCs and 340B operate, and if implemented would do “significantly more harm than good.”

“However, if HHS insists on finalizing this regulation,” NACHC continued, “we strongly urge you to make several important adjustments to the regulatory text.”

State and local FQHC stakeholder comments to HRSA about the proposed rule, for the most part, repeated what NACHC said, tailored to state and local circumstances.

NACHC told HRSA that Trump’s order “reflects fundamental misunderstandings about FQHCs’ mission and operations—and fails to recognize that FQHCs are already part of the solution to unaffordable drug prices, not part of the problem.”

“The core mission shared by every FQHC is ensuring that all persons can access high-quality, affordable health care, regardless of their ability to pay,” NACHC said. “This includes access to primary care, preventive care, dental care, mental health services, substance use disorder services—and pharmaceuticals. Ensuring that low-income uninsured and underinsured patients can afford their prescribed medications is one of the central reasons why FQHCs exist.”

NACHC said the order “reflects a fundamental misunderstanding of the 340B program, and—if implemented as written—would decrease some patients’ access to affordable drugs.” It said the order’s mistaken assumption that FQHCs always pay only a penny for insulin and injectable epinephrine “would have many negative impacts on patients, both in terms of how much they would need to pay for life-savings medications, and the consistency of their medical care.” Under the order, many low-income patients “would end up paying more for their insulin” than what health centers charge them now “depending on the type of insulin a patient needs,” NACHC said. Many patients, it said, “would face dramatic fluctuations in how much they pay for insulin from one calendar quarter to the next,” and to keep them on the most-affordable product, “health centers would seek to put them on the type of insulin with the lowest 340B price” in a given calendar quarter, creating “a significant administrative burden for health center staff, and potential clinical complications for patients.”

NACHC insisted, at a bare minimum, that the administration make five changes to the rule.

  • “Align the definition of ‘low-income’ individual who is eligible for discounts under this regulation with the definition that has been in place throughout the FQHC program for over 50 years—200% [of the federal poverty level] FPL.”

  • “Clarify in the regulatory language that only those patients who meet the 340B patient definition are eligible for the 340B (or lower) price.”

  • “Add regulatory language to ensure that FQHCs are not forced to provide discounts to underinsured patients if doing so would violate the terms of their insurance contracts.”

  • “Clarify the definition of ‘high cost sharing requirement.’”

  • “Recognize that, as a result of this regulation, the ‘minimal administration fee’ for insulin and injectable epinephrine will differ from the fees (if any) associated with dispensing other pharmaceuticals.”

Medical Colleges and Family Physicians Comments

The Association of American Medical Colleges (AAMC) pointed out to HRSA in its comments that, if the rule is published as written, it “would be the first time that HRSA has imposed a requirement for 340B covered entities to ensure that patients pay no more than the 340B-discounted price for a drug.”

“We do not believe that any patient should be denied these, or other necessary medications, because of an inability to pay,” AAMC said. “FQHCs already are required to provide care on a sliding scale basis and generally have programs available to provide assistance to individuals who cannot afford their medication. If the rule is finalized the major impact would be to restrict funds available to FQHCs to best meet the needs of their communities. We do not believe that was the intent of the 340B Drug Pricing Program.”

“We feel that this proposal is unnecessary,” AAMC said. “The law clearly states that health centers must ensure that no patient is denied services due to an inability to pay…. While these requirements do not explicitly apply to drugs, discounts on drugs are frequently included as they are often viewed as part of the services furnished.”

The American Academy of Family Physicians (AAFP) told HRSA in its comments that while its members are concerned about the cost of insulin and epinephrine and supports policies to make them more affordable to patients, it is concerned “that this proposal will have limited benefit for low-income patients and reduce the profit margin of community health centers, which is ultimately used to improve access to care for other patients and services.”

“If implemented, this proposed rule could result in additional financial strain for [community health centers] CHCs, which already operate on very thin margins,” AAFP said. “This proposal could unintentionally increase barriers to accessing other services for CHC patients at a time when CHCs are already struggling to keep their doors open and patients are increasingly dependent on their services.”

Cigna Comments

Health insurance company Cigna, which owns pharmacy benefit manager Express Scripts, focused its comments to HRSA on several changes the administration could make in its final rule to make it easier for Cigna and other “private sector partners to support the implementation of this proposed rule.”

“For this program to succeed, it needs to be simple for FQHCs, pharmacies, and patients,” Cigna said. “If FQHCs are to pass 340B discount pricing to low-income Americans, the operational and logistical challenges above must be addressed and solved for prior to implementation. Failure to do so could result in confusion among patients, frustration by providers, and, ultimately, impede the stated goal and result in little to no impact on improved access to insulin and/or injectable epinephrine.”

Cigna said HRSA needed to “to clearly identify which FQHCs are participating and maintain a directory or regularly updated roster of health centers that participate in the envisioned program,” possibly with “a unique code or identifier that distinguishes FQHCs.” The company added, for FQHCs to pass through 340B pricing to patients, “it will be critical for HRSA to require FQHCs to adjudicate a prescription claim if the patient has health insurance.”

“This is necessary to ensure those prescription claims data are available for clinical programs and care coordination services.” The company said. “Having a comprehensive view into medical and prescription utilization is important for whole health care coordination and identifying gaps in care that can lead to negative outcomes and increased spending. Additionally, the pharmacy provider processing the claim should adhere to 340B claim stamping by using National Council for Prescription Drug Programs (NCPDP) submission clarification code 420-DK value 20.”

Cigna also asked HRSA for more clarity regarding patient income verification, and the requirements that patients have no health insurance, high cost-sharing obligations for insulin or epinephrine, and a high unmet deductible.

Next Steps

HRSA’s next steps would be to draft a final rule, submit it to the White House Office of Management and Budget for approval, and publish it in the Federal Register. If Democratic presidential candidate Joe Biden wins next week’s presidential election, his administration likely would roll back a final rule’s effective date, as a prelude to deciding whether to implement or withdraw the rule. The odds are that his administration would end up scrapping the rule altogether as it develops its own drug pricing blueprint.


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Deadline Tomorrow for 340B Comments to Sen. Alexander and Rep. Walden

The end of the day tomorrow, Oct. 30, is the deadline to submit ideas about how to improve 340B to the top Republicans on the U.S. House and Senate committees with jurisdiction over the program.

On Oct. 9., U.S. Senate Health, Education, Labor, and Pensions (HELP) Chair Lamar Alexander (R-Tenn.) and U.S. House Energy and Commerce (E&C) ranking Republican Greg Walden (Ore.) invited all 340B program stakeholders to submit their comment and recommendations by email to 340B@help.senate.gov and 340B@mail.house.gov. In a news release, they cited concerns about 340B, including: confusion about program requirements; a lack of data to ensure program integrity; a history of minimal oversight; program guidance that does not carry the weight of law; inadequate reviews of hospital eligibility; impediments to determining the extent to which 340B is appropriately serving patients; manufacturers limiting contract pharmacy involvement in 340B; and the fact contract pharmacies are not referenced in the 340B statute.

Alexander’s top health care staff member on the HELP committee, and Walden’s on the E&C committee, did not respond to requests for comment on whether all comments received will be made available to the public. We have asked leading covered entity and drug manufacturer groups for copies of their comments.


If your organization is submitting comments, please send us a copy at info@340breport.com.

Alexander and Walden’s committee health care aides also did not answer what would happen after the deadline for comments, and when. The lawmakers might introduce 340B legislation during the post-election lame duck session. Other lawmakers reportedly are considering introducing their own bills including legislation that would prohibit drug manufacturers from restricting 340B pricing at contract pharmacies as well as other bills that would be more favorable to drug makers. Bills have been introduced in the House and Senate to protect hospitals from losing 340B eligibility during the COVID-19 pandemic, and to lift the prohibition on 340B hospital drug purchases through group purchasing organizations during the emergency.


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HRSA Tweaks the Manufacturing Side of its 340B Database

The U.S. Health Resources and Services Administration (HRSA) this week announced four changes relevant to drug manufacturers in the 340B Office of Pharmacy Affairs Information System’s (340B OPAIS) ceiling price and manufacturer registration components.

HRSA Office of Pharmacy Affairs Director Adm. Krista Pedley previewed some of the changes in her July 21 remarks at the 340B Coalition virtual summer conference.

First, in 340B OPAIS’ pricing component, OPA has built into the platform a way for OPA and manufacturers to converse when OPA has questions about mismatches between manufacturer-supplied 340B ceiling prices and the ceiling prices OPA computes using data from the U.S. Centers for Medicare & Medicaid Services (CMS). Before, those conversations took place outside of 340B OPAIS via email.

Second, inactive or terminated NDCs will no longer appear in manufacturers’ 340B OPAIS dashboards when it is time for manufacturers to upload new quarterly pricing data.

Third, OPA will start including the 340B ceiling price adjudication notes manufacturers and OPA reviewers provide on 340B OPAIS’ product detail and reconciliation task pages.

Fourth, in 340B OPAIS’ manufacturer registration component, the 340B Prime Vendor now has the ability to impersonate a manufacturer during the registration process, to “allow the call center to assist more readily with manufacturer change requests and registrations,” HRSA said. “The prime vendor will not be able to submit any data in OPAIS on behalf of a manufacturer nor will the Prime Vendor have access to any information in the pricing component of OPAIS.”


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Calif. 340B Health Centers Sue to Stop State Medicaid Rx Drug Benefit Transfer

A group of California health centers today sued in federal court to stop Gov. Gavin Newsom (D) and the state Department of Health Care Services from implementing Newsom’s 2019 executive order that, effective January 2021, will shift Medi-Cal (Medicaid) managed care pharmacy benefits into Medi-Cal fee for service, which pays acquisition cost for 340B-acquired drugs versus higher negotiated rates under Medi-Cal managed care. The transfer is expected to cost 340B providers hundreds of millions of dollars in lost revenues on 340B drugs billed to Medi-Cal.

According to Regina Boyle, one of the attorneys representing the health centers, the suit alleges that the the drug benefit transfer, also called a carve out,

  • fails to reimburse federally qualified health centers (FQHCs) as required by federal law

  • fails to comply with requirements for obtaining a Medicaid state plan amendment from the U.S. Centers for Medicare & Medicaid Services

  • is preempted by the federal approach to avoiding duplication of 340B discounts and Medicaid rebates on the same drugs.

“Without the court’s immediate intervention, the plaintiff FQHCs and their patients will suffer irreparable injury because they will no longer be able to provide health care services that are desperately needed by the communities they serve,” the health centers say in their complaint. “It is critical that low income communities have access to affordable healthcare as Congress intended, especially in the midst of a global pandemic.”

The suit was filed by the Community Health Center Alliance for Patient Access (CHCAPA), a statewide organization of FQHCs serving 2.1 million patients, and nine individual California health centers.

"The state's ill-conceived action threatens the ability of many community health centers to provide critical programs to uninsured and low-income families across the state," CHCAPA President Anthony White said in a news release. "It creates additional hardship for Medi-Cal patients who already face a daunting health care bureaucracy every day as they seek to access care."

“Medi-Cal patients depend on us for access to comprehensive primary and preventive health care," said Leslie Abasta-Cummings, CEO of Livingston Community Health, which operates six health centers in the Central Valley. "This new system will have a devastating effect. It will force us to reduce the level of care we provide and the number of patients we are able to serve."

"Excluding our centers from the 340B Program will jeopardize patients' access to care, increase risk for health problems and raise costs," said Ronald E. Castle, CEO at Community Health Centers of the Central Coast, Inc., which operates 30 health centers and seven mobile dental and medical units. "The impact of this pharmacy transition is frightening and devastating to the health outcomes of our patients."